Correlation Between Take Two and United Airlines
Can any of the company-specific risk be diversified away by investing in both Take Two and United Airlines at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Take Two and United Airlines into the same portfolio, which is an essential part of the fundamental portfolio management process.
By analyzing existing cross correlation between Take Two Interactive Software and United Airlines Holdings, you can compare the effects of market volatilities on Take Two and United Airlines and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Take Two with a short position of United Airlines. Check out your portfolio center. Please also check ongoing floating volatility patterns of Take Two and United Airlines.
Diversification Opportunities for Take Two and United Airlines
0.86 | Correlation Coefficient |
Very poor diversification
The 3 months correlation between Take and United is 0.86. Overlapping area represents the amount of risk that can be diversified away by holding Take Two Interactive Software and United Airlines Holdings in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on United Airlines Holdings and Take Two is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Take Two Interactive Software are associated (or correlated) with United Airlines. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of United Airlines Holdings has no effect on the direction of Take Two i.e., Take Two and United Airlines go up and down completely randomly.
Pair Corralation between Take Two and United Airlines
Assuming the 90 days trading horizon Take Two Interactive Software is expected to under-perform the United Airlines. In addition to that, Take Two is 1.18 times more volatile than United Airlines Holdings. It trades about -0.1 of its total potential returns per unit of risk. United Airlines Holdings is currently generating about 0.12 per unit of volatility. If you would invest 29,429 in United Airlines Holdings on November 4, 2024 and sell it today you would earn a total of 1,658 from holding United Airlines Holdings or generate 5.63% return on investment over 90 days.
| Time Period | 3 Months [change] |
| Direction | Moves Together |
| Strength | Strong |
| Accuracy | 100.0% |
| Values | Daily Returns |
Take Two Interactive Software vs. United Airlines Holdings
Performance |
| Timeline |
| Take Two Interactive |
| United Airlines Holdings |
Take Two and United Airlines Volatility Contrast
Predicted Return Density |
| Returns |
Pair Trading with Take Two and United Airlines
The main advantage of trading using opposite Take Two and United Airlines positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Take Two position performs unexpectedly, United Airlines can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in United Airlines will offset losses from the drop in United Airlines' long position.| Take Two vs. MAHLE Metal Leve | Take Two vs. METISA Metalrgica Timboense | Take Two vs. American Airlines Group | Take Two vs. Charter Communications |
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Check out your portfolio center.Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Analyst Advice module to analyst recommendations and target price estimates broken down by several categories.
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